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Many companies continue to miss out on the very generous tax
reliefs given for R&D expenditure, particularly those
developing software for use in their financial services
activities.
Software is specifically recognised as a technology; its
development is often difficult and uncertain, and the resolution of
technological uncertainty is just what R&D relief is about. If
your staff are competent professionals working in the field, and
they consider their development assignments to be uncertain as to
whether or how results can be achieved, then HMRC is almost bound
to accept the principle of a claim. Nor does it matter if
competitors have already found a solution – as long as
they have not made their discoveries public.
We have considerable experience of financial services companies
making successful claims in such fields as:
securities trading
asset management
internet security
interaction between systems (this is accepted as a possible
technological uncertainty even where individual systems themselves
have been fully developed)
building functionality for clients' own adaptation
migration to the internet.
What are the benefits?
A small or medium sized enterprise (SME) (with up to 500
employees) currently obtains a tax deduction of 200% (soon to be
225%) of qualifying R&D cost. So a taxpaying SME may derive a
34% cash benefit from categorising cost as qualifying R&D. A
loss making SME may be able to claim a payment of 25% of cost, even
where no corporation tax has ever been paid, and for some current
periods, where no PAYE nor NIC has been paid. Larger companies may
obtain a tax deduction on 130% of cost.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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